Within three days of the budget approval, the fiscal federal entity reveals it doesn’t know how the government will reach operational cutbacks

While the critics to the Fiscal Oversight Board increase in the United States Congress, the entity, in turn, criticized Ricardo Rosselló Nevares’ administration by revealing they are not receiving “consistent and reliable” information about the public finances of the Island and they are still waiting for the approved cutbacks plans in the fiscal plan, which are decisive to know whether there will be a reduction of working hours or a Christmas bonus suspension.

Relacionados:

Yesterday, the president of the Oversight Board, José B. Carrión, wrote to Rosselló Nevares in order to tell him they are still waiting for the administration to define what the “essential services” are in the light of the PROMESA federal law. Carrión also expressed his concern, since he believes that the public discourse seems to “underestimate” the critical position in which the government is submerged, and the implications of that for the rest of the Island.

“We can no longer enable to continue as usual”, said Carrión, while he reminded Roselló Nevares that the Board has been “flexible”, caving to the dates extension requests on account of it being a new government administration.

“We must reiterate our previous requests, urging the administration to do and communicate as soon as possible the public politics determinations needed, in what constitutes essential services in the context of PROMESA”, said Carrión.

Carrión’s request to the government was extended to the leaders of the legislative branch Thomas Rivera Schatz and Carlos “Johnny” Méndez, and it emerged three days before the due date, established by the Board, for the legislature to decide what they are spending the public funds on. All of this as part of the budget’s approval for the fiscal year of 2018.

The government answers

Inmediately, the Puerto Rican representative in the Oversight Board, Elías Sánchez Sifonte, refuted Carrión´s comments and he also pointed out that the government advisors meet “almost on a daily basis” with their counterparts at the Board and have debated the certified fiscal plan implementation schemes “in detail”.

“The government of Puerto Rico clearly understands the seriousness of the fiscal situation we are in”, said Sánchez Sifonte.

“In those meetings we’ve also been proving the implementation plans with the purpose of assuring the resources provision to cover the essential services according to the requirements of PROMESA and under our certified fiscal plan”, he added.

El Nuevo Día asked La Fortaleza for a copy of the implementation plans, in which there would be an explanation on how the government will cut $851 million as from July. At press time, no answer had been received.

According to the calendar established by the Board, such plans should have been ready for last April 28th.

Last May 8th, for reasons unknown, the Board gave the government 14 additional days to adjust the budget.

On May 31st, Rosselló Nevares submitted the budget to the Legislature without having the Oversight Board certification.

The federal entity ended up certifying the budget halfway two days later, warning there would be changes that are still unknown.

Lack of transparency

On his part, the commonwealth supporter senator Eduardo Bhatia charged against the Board and the government of Rosselló Nevares as a result of this situation.

“The letter sent (yesterday) by the Oversight Board to the governor is a month and a half late. Puerto Rico is going through the worst crisis in its entire history, the Island has been declared in bankruptcy by Rosselló and can no longer tolerate the lack of transparency of both the governor and the Board”, said Bhatia.

“To continue hiding information is condemning and turning the back to the more vulnerable”, added the senator.

This week Bhatia delivered a serious blow to the government in Court, once the Federal District Judge Laura Taylor Swain ruled in favor of a measure, which looks for the disclosure of information that gave ground to the recommended budget and for the local dispute to be sent back to the local court.

“The letter from Carrión was sent three days after La Fortaleza delivered a liquidity report to the Center for Investigative Journalism (CIJ), which revealed that the past May 26th the Treasury had a positive balance of $1,418 billion and also after Sánchez Sifonte assured the labor reform will not be implemented, which he repeated yesterday. According to the lawyer, this is due to the fact that the government will accomplish what’s required by the Board.

“Small improvements in liquidity do not change the Island’s fiscal reality. Under the current law, as from July, Puerto Rico will be facing a cash flow problem that will get worse due to the loss of federal funds and the depletion of the pensions funds assets”, stated Carrión.

The working day

In this way, Carrión underlined that the reduction of the working day doesn’t depend only on the money there is in the Treasury.

When last March, the Board approved the fiscal plan with some conditions, it established the reduction of the working day, unless two conditions are fulfilled: a reserve of $200 million in cash and a plan detailing how the cutbacks will be made in the governments operations. Yesterday, the Board implied they haven’t received this plan yet.

Even though the government assures it will reduce the operational cost, according to the bondholders, the budget remains with similar or even higher expenses levels, since it doesn’t allocate any money for the public debt.